Oklahoma Earthquakes: Who Pays?

A collapsed building in Cushing, Oklahoma, after several 4.0-range quakes rocked the area in
late 2015.

Ariel Ross.

A collapsed building in Cushing, Oklahoma, after several 4.0-range quakes rocked the area inlate 2015.

Kel Pickens and his wife Carolyn West Mayer live in Stillwater, Oklahoma, one of the most seismically active parts of the state. They say they’ve experienced damage to their house, including separation of the cement steps, cracks in the driveway and small cracks in their walls. And they say all the damage has resulted from dozens of earthquakes in the area over the past two years.

New maps released by the U.S. Geological Survey reveal that seven million people are now living in areas at high risk for earthquakes. Not naturally occurring earthquakes but man-made – induced by oil and gas operations that pump wastewater deep underneath the ground. Parts of Oklahoma and Texas are at highest risk. Last year Oklahoma had more than 900 quakes, up from 3 in 2007.

In Stillwater, Kel Pickens has few options for recouping damages. While many insurance companies offer inexpensive riders for earthquake damage, deductibles for can be as high as 20 percent of a home’s value. That means most homeowners will pay out of pocket for cracked walls, shifting foundations and broken windows.

Out of about 100 claims filed for earthquake damage in Oklahoma in 2014, only eight were paid, according to the Oklahoma Insurance Commissioner.

Pickens and Mayer are active supporters of Oklahoma’s anti-fracking movement. They were surprised to learn that their insurer didn’t even offer insurance for earthquakes in Oklahoma. But they won’t be looking for earthquake coverage from another company, out of principle.

“Even if we did have that offered we still would not buy it. In our opinion it is not the citizens of Oklahoma that should be paying to have this insurance,” Pickens said.

They are among a number of Oklahoma residents who want oil companies to be accountable for damages. Some of these residents are suing energy companies.

In January, more than twenty homeowners launched individual lawsuits against a dozen affiliates of three energy companies operating in Oklahoma, claiming drilling wastewater activities caused two recent damaging quakes. They’re seeking actual and punitive damages. And they want an injunction to prevent companies from injecting saltwater along fault lines and near high population areas.

Blake Watson, a professor of law at the University of Dayton who’s been studying the litigation, says circumstances in Oklahoma the last three years present a best case scenario for a plaintiff in front of a jury.

“There’s been considerable increase of earthquakes and it’s increasingly obvious that it’s due to the injection of wastewater,” Watson said.

None of the energy companies named in the lawsuits would comment for this story, citing ongoing litigation.

In Colorado, a bill has passed the state house that would make it easier for homeowners to sue oil and gas companies for property damage related to induced earthquakes. The industry there strongly opposes the legislation. In Oklahoma, there is similar pushback from oil and gas against laws or regulations that would restrict operations.

Cory Williams, a Democratic state representative for Stillwater, fears that it will take a seismic event that causes a significant amount of damage to make most legislators take action to regulate wastewater injection.

“That will be the tipping point where the industry has harmed itself and the public has turned against it,” Williams says.

A big quake in Oklahoma would pose economic risks not just for homeowners, but the whole state. A 2015 report from Standard and Poor’s Rating Services predicted quakes linked to oil and gas production will “have sharp economic consequences” on real estate investment, property values and job growth.

Richard Morrisette, an Oklahoma Democratic state representative, has been pushing for tougher regulation to prevent a large quake that would cause “staggering” economic damage. But he thinks the hundreds of small quakes his state has faced could take their toll as well.

On the day of a 4.5 earthquake in December of last year, he received phone calls from two people who had been planning to relocate to Oklahoma and buy property, and changed their minds because of the quake.

“How many dozens maybe hundreds of other people are re-deciding to move to Oklahoma on this issue alone?” Morrissette says.

Despite ongoing quakes, most Oklahomans remain hesitant to curtail oil and gas production – not with low oil prices in a state where one fifth of all jobs are tied to the industry.